Small business scams

The Set-Up

You get an invoice for some goods or a service.

The Hook

It's for something that you regularly order, so you pay the invoice without question.

The Sting

The real invoice arrives and your heart sinks. You realise that you've just credited the account of a scammer.

How small business scams work

Running a business can make you a target for all kinds of scams. From being billed for advertising you that didn't place, to being asked to forward a payment to a non-existent third supplier.

When cash flow is king, you can't afford to lose out to a scammer. Be aware of these common small business scams.

Types of small business scam

False invoices

This kind of scam is usually linked with fake publications and domain name renewals. But small businesses have been falsely billed for other products and services. The scam works in one of two ways:

• You get a fake invoice for something that you have genuinely ordered.
• You are billed for a product or service that you didn't order, but are told that you did.

It can be really easy to pay a bill without question, especially if it’s for something that you order all of the time.

In the case of a publication or a domain name, a scammer may call to confirm details of an advertising order − even though your company or organisation never made such an order.

The scammer may try to confuse you, or your staff, by referencing a real advertisement, or entry, that you have made on a genuine website or publication.

Fake directories and publications

Some scammers will go as far as producing small print runs of magazines, or online directories, to help sell advertising to their ‘clients’.

Businesses believe that they have placed a genuine advertisement when, in actual fact, the publication is seen by no more than a handful of other victims.

You may even be offered the chance to advertise for free. . 'Great!' you think. Not so great is the small print that says that there is a cost for processing and administering your listing. And, that by accepting the offer, you agree to this charge.

If you refuse to pay, the scammers may try to intimidate you with threats of legal action. These threats are usually empty. But many businesses pay out before they realise that the scammers will back down if challenged.

Amended bank details

You get a phone call from, what you think is, one of your regular suppliers. They’re just letting you know that they’ve changed their bank account details.

You amend your accounting system. Next thing you know, you’re paying genuine invoices, from your genuine supplier, straight into a scammer’s bank account. And you only realise this when your genuine suppliers gets in touch  to say that your account is in arrears.

Fake customers/enquiries

Some scammers pose as customers that are interested in using your services.

They may ask you if you’re available to take pictures at their son’s wedding, for instance. Or appear to be interested in hiring your bach, perhaps.

The scammer will make multiple enquiries, usually by email. They'll ask all sorts of details. By the second or third email they’ll probably seem pretty committed. So you try your best to be accommodating.

At some point the scammer will arrange to pay you – in full or a deposit. When the payment shows up, it appears that they’ve paid too much.

Next comes an elaborate request to forward on a portion of the money to a third party – a travel agent, or limousine-hire company, perhaps. You oblige, only to find that their first payment has been reversed.

You’re left out of pocket to a customer that never was. Worse still, you have been used to launder money, which is against the law.

Search Engine Optimisation (SEO)

The age of the internet has seen scammers jump onto the SEO bandwagon.

They may promise to crack complicated algorithms, to build links or to have an ‘inside man’ at Google.

Unless you're very familiar with technology and all its jargon, it can be very easy to be ripped off.

Be very wary of spam emails, or any other approaches that come out-of-the blue that promise to turn around your business’s web ranking.

9 times out of 10 what they are promising is impossible. Or, at the very least, you'll be over-charged you for simple steps that you could have taken yourself.

Protect your small business from scams

• Limit the number of people in your business that has authority to make purchases or write orders.
• Keep written records of all orders and purchases.
• Reconcile all invoices against actual orders. Ask for proof of purchase and check with colleagues to make sure that you have received what you paid for.
• If an invoice seems to reference an advertisement or directory entry you genuinely made, make sure that all of the details add up. False billing scammers may use your real advertising as the basis for their fake invoices, e.g. company name, address and bank details.
• Deal only with people and companies you know and trust.
• If you agree to buy from a new supplier, make sure you know exactly what they are offering, at what price, quality, terms and conditions.
• Don't accept business proposals over the phone. Ask to see offers in writing before you accept them.
• Seek advice when making a significant purchase. Don't take the seller's word about competing products or prices.
• Be careful to read the fine print on any offer you receive. If the print is on a fax and is blurry, request a proper copy ... but only use a non-premium telephone or fax number.
• Check any number you call or fax at a seller's request to make sure it is not a high-charging premium number. If in doubt, call your telephone service provider.
• If you receive a letter, email or phone call from a ‘supplier’, asking you to update their bank details, be wary. It may be a scam. Phone your supplier to verify the request. Use a phone number from a trusted source, for example the Yellow or White Pages.
• If you're planning on optimising your website, ask a web-savvy friend, or associate, to recommend a professional who can help.

Help protect others from small business scams

If you've been affected by a small business scam, please help us to warn others by reporting your story to Scamwatch. We will treat your personal details in the strictest confidence.

Report your scam here.